CAI-NJ Aug.2016

UNDERSTANDING STATUTORY DEADLINES IN TRANSITION By Mary W. Barrett, Esq. and Andrew Podolski, Esq. Stark & Stark

B oard members, property managers, and sometimes even attorneys, are often unsure about time limits for community association transition. This has been partly due to a lack of clarity in the law but in some cases just plain confusion about the two main statutory limita- tions periods that are applicable for community associ- ation transitions in New Jersey: the ten-year statute of repose and the six-year statute of limitations.

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STATUTE OF REPOSE The New Jersey statute of repose states that “no action... arising out of the defective and unsafe condition of an improvement to real property...shall be brought...more than 10 years after the performance or furnishing of such ser- vices and construction.” (N.J.S.A. 2A:14-1.1.) The statute of repose will begin to run at a specific time and allow a claim to be filed for ten years. After the repose period expires, no construction defect claim can accrue and none may be filed. The statute of repose cannot be tolled and once the ten years runs on an item, the association can pursue no further claims for construction defects against the developer and/or other parties such as subcontractors. In other words, once that ten years runs, it is “game over” for the transition claims. Accordingly, it is critical to determine exactly when the ten-year statute of repose commences and when it will run out. The statute of repose begins to run upon substantial completion of construction. In a broad sense, substantial

completion would be the date a certificate of occupancy is issued. The underlying construction contract may define substantial completion and in that case the date would be determined by that definition. For example, the construc- tion contract may state that substantial completion is deter- mined when the engineer issues a written certificate so the date of that certificate would determine when substantial completion was achieved and the statute of repose would start to run from that date. Also, each trade contractor that completes its work on the project may have its own substan- tial completion date – either by written certificate, certificate of occupancy, or otherwise. Thus, different portions of the community and different elements of the construction may be substantially completed at different times – especially in large or phased communities - and this date will be different for different areas and contractors. The grading and drainage work will be completed early on in the con- struction of the community, buildings 1 through 12 will most certainly be completed at different times, the framing work CONT I NU E S ON PAGE 30

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